Upgrades may help struggling mall

August 20, 2012|By Kate Thayer | Tribune reporter

Signs of optimism surround the near-desolate Charlestowne Mall after a recent study showed the area can support a traditional shopping mall.

Vacancies inside the mall, located at 3800 E. Main St. (Route 64), have been growing for years, including last year’s closing of anchor store Sears. A movie theater, Kohl’s, Von Maur, Carson Pirie Scott and only a handful of interior shops remain. Officials and others blame unstable ownership – including a stint when the property was bank-owned – a lack of marketing and the economy.

Because substantial sales tax revenue is at stake, city officials spent $25,000 on a retail market feasibility study by Chicago-based Melaniphy & Associates, Inc. The recently released report offers a sense of optimism, saying the surrounding population would shop at the mall if it had more selections, and it has the money to spend.

The report pointed out there are no traditional mall competitors in the immediate area, and also took into account demographics and spending habits of the population.

“The study indicated there is still great potential,” said Chris Aiston, St. Charles’ economic development director.

However, the mall, which opened in 1991 and never reached full capacity, would likely need millions of dollars in improvements like remodeling and renaming to realize that potential, Aiston said. Until then, shoppers will continue to frequent strip malls and free-standing stores in the area, or travel farther to other Chicago-area malls.

“Clearly, there is no realistic hope for a turnaround in tenant occupancy until dramatic changes are made,” said Neil Johnson, broker for Sperry Van Ness – a leasing agent hired by the current owners. “And, those changes will certainly cost many millions of dollars.”

Charlestowne Mall, LLC – a California-based investment group – purchased the mall about two years ago, ending a seven-year run of bank ownership. While the investors, who could not be reached for comment, originally had plans for an ice rink and a seafood restaurant, the plans fizzled and the store exodus continued.

Aiston said it’s tough to bring in any tenants with the mall’s current vacancy rates.

“It’s hard to attract one at a time. A lot have to come in all at once,” he said.

St. Charles officials acknowledge there’s little they can do because the city doesn’t own the mall. Instead, they can help the current owners sell the property to new, more local owners, or find investment partners, said Mayor Don DeWitte.

The city could also establish a business district for an eastern portion of the city that includes the mall. A business district provides officials with options, including establishing an additional sales tax – from 0.25 to 1 percent – on items sold within the district. That money could go toward development at the mall or incentives for owners.

“All options are on the table with regards to how the city will deal with this particular property,” DeWitte said. Establishing a business district “gives the city an additional tool in our tool box.”

The council is expected to discuss the issue at upcoming meetings this fall. Public hearings would be required before a final vote.

DeWitte said he doesn’t believe the additional tax would be enough to steer shoppers elsewhere. He also noted large attendance at a recent public workshop to discuss Charlestowne Mall and offer suggestions for improvement.

“Most residents will realize it’s not an additional tax burden, but an investment,” he said.

The full study can be found on the city’s website, www.stcharlesil.gov.